SMM Base Metals Market Daily Review (2014-4-23)

SHANGHAI, Apr. 24 (SMM) -

Copper:
The most active SHFE copper contract price leveled out during Tuesday's night session after starting at RMB 46,580/mt, helped by a rebound in LME copper prices. The contract prices encountered resistance subsequently at RMB 46,700/mt, and closed up RMB 150/mt at RMB 46,640/mt. Traded volumes rose slightly to around 110,000 lots, while positions gained 13,192 lots. On Wednesday, SHFE copper prices rallied to RMB 46,860/mt at some point, but later pulled back immediately after the release of HSBC's China manufacturing PMI which was still soft. The red metal hovered around RMB 46,600/mt during the afternoon trading session, falling as low as RMB 46,470/mt, but rebounded at the tail of the trading to close up RMB 300/mt, or 0.65%, at RMB 46,790/mt. Traded volumes expanded 11,330 lots, while positions increased 11,416 lots. SHFE copper prices still are confronted with resistance at the RMB 47,000/mt mark, and are expected to be range-bound for the short term.

In the Shanghai physical market, copper was offered Wednesday at a premium of RMB 440-600/mt over the nearby SHFE contract. Traded prices were RMB 47,980-48,150/mt for standard-quality copper and RMB 48,040-48,280/mt for high-quality copper. As SHFE copper prices rallied before a pullback, cargo holders ramped up deliveries at high prices, and copper supply from long-term contracts continued to flow in the market. As a result, physical premiums fell with signs of panic selling in the market, but downstream producers still favored standard-quality copper, allowing narrower gap between standard-quality and high-quality copper. Standard-quality copper was quoted at a premium of RMB 440-520/mt over the nearby SHFE contract by the midday. Middlemen were disinclined to enter the market after physical premiums continued to narrow, with light trading volumes and supply exceeding demand. As SHFE copper prices traded in a narrow range during the afternoon session, some speculators bought spot copper and liquidated futures contracts, with high-quality copper brands gaining their favor. Decreasing copper supply later pushed up premiums to RMB 450-600/mt over the nearby SHFE contract, but traded prices fell slightly to a RMB 47,950-48,150/mt band.
       
Aluminum:
On Tuesday night, SHFE 1407 aluminum contract became the most active one, which dipped to RMB 13,315/mt after starting at RMB 13,340/mt. June aluminum on the SHFE, however, rebounded to RMB 13,385/mt afterwards before finishing the night session at RMB 13,380/mt. Trading volumes totaled 9,866 lots, and positions added 1,454 lots to 110,288 lots. HSBC's flash China manufacturing PMI rose to 48.3 in April, snapping a 5th straight month of decline. The most active contract moved higher to RMB 13,515/mt on Wednesday thanks to upbeat manufacturing data, closing the day up RMB 245/mt or 1.85% at RMB 13,515/mt. Trading volumes surged to 37,812 lots, and positions increased 7,962 lots to 116,796 lots. 

Spot aluminum largely traded at RMB 13,160-13,170/mt in Shanghai, RMB 13,180-13,190/mt in Wuxi, and RMB 13,190-13,200/mt in Hangzhou on Wednesday. Rising SHFE 1405 aluminum contract allowed sellers to raise offers and lured buyers in. In the afternoon, some raised offers to RMB 13,230/mt.

Zinc:
SHFE 1407 zinc contract prices opened at RMB 15,125/mt on Tuesday evening, and then rose to touch RMB 15,180/mt due to the strengthening LME zinc prices and increasing longs on the SHFE market, and closing at RMB 15,150/mt, up RMB 90/mt or 0.6%. Trading volumes increased by 9,010 lots to 10,394 lots, and total positions increased by 4,070 lots to 72,854 lots. SHFE 1407 zinc contract prices opened at RMB 15,155/mt on Wednesday. HSBC's initial April PMI for China was 48.3, in line with market expectations and topping the 48 in March, and snapping a six-month losing streak. As longs increased, SHFE 1407 zinc contract prices touched an intraday high of RMB 15,190/mt, then fluctuated at high levels in the afternoon, and closing at RMB 15,190/mt, up RMB 130/mt or 0.86%. Trading volumes increased by 14,030 lots, to 25,328 lots, and total positions increased by 6,702 lots, to 79,556 lots.

#0 zinc prices were between RMB 15,150-15,180/mt, ranging from RMB 10/mt below to RMB 10/mt above SHFE 1407 zinc contract prices. #1 zinc prices were between RMB 15,130-15,150/mt. SHFE 1407 zinc contract prices hovered around RMB 15,160/mt on Wednesday, up RMB 100/mt from the previous day. Supply in Shanghai remained tight, with cargo holders holding back goods and smelters also unwilling to sell goods. Spot prices rose with SHFE zinc prices. Downstream buying interest was low, with transactions quiet. Shuangyan branded #0 zinc prices were between RMB 15,170-15,180/mt, with some transactions made at RMB 15,190/mt. Prices for Jiulong, Qinxin and Yuguang were around RMB 15,160/mt, with RMB 15,150/mt for Bailing and Yongchang branded #0 zinc.
  
Lead:
The most active SHFE 1405 lead contract price started Tuesday's night session at RMB 13,870/mt, and then tracked LME lead prices up to close RMB 130/mt higher at RMB 13,965/mt. Traded volumes totaled 326 lots, while positions lost 14 lots to 6,472 lots. HSBC's China manufacturing PMI for April rose slightly to 48.3, up from March's 48, fueling a bullish sentiment in the market. SHFE lead prices hovered around RMB 13,930/mt during the morning trading session, and closed Wednesday up RMB 120/mt at RMB 13,955/mt. Traded volumes rose sharply to 1,208 lots, and positions gained 70 lots to 6,556 lots.

In the Shanghai physical lead market, goods from Chihong Zn & Ge traded Wednesday between RMB 13,960-13,980/mt, a discount of some RMB 40/mt over the most active SHFE 1405 lead contract. Traded prices were RMB 13,950/mt for Nanfang and Tongguan brands, and RMB 13,920-13,930/mt for Shuangyan, Humon, and Hanjiang resources. As a sharp rally in SHFE lead prices and relatively tight supply pushed up physical lead prices, smelters turned less willing to move goods, while traders held prices firm on low inventories and with a bullish sentiment. Meanwhile, high prices in the Shanghai market shied downstream producers away from purchasing goods, putting a lid on trading activity on Wednesday.
    
Tin:
In Shanghai physical tin market, #1 tin was offered between RMB 139,500-141,500/mt on Wednesday. Mainstream traded prices were RMB 139,500-141,000/mt. Consumption remained sluggish.
 
Nickel:
SMM #1 nickel prices were between RMB 127,000-127,800/mt. Jinchuan raised nickel prices by RMB 4,000/mt, to RMB 128,000/mt. rising nickel prices boosted transactions made by traders, but downstream buying interest was low.